St. John v. . Roberts

This action is brought against the defendants as indorsers of a promissory note, made by one Waterbury, to the order of the defendant Roberts. There is no dispute about the facts of the case, and they are as follows: Before the note arrived at maturity it was indorsed by the defendants and deposited in bank in New York, and, on maturity, payment was demanded of the maker, and being refused the same was protested and the indorsers duly charged. The defendants placed the note, with their indorsements thereon, and the protest thereof annexed, in the hands of an auctioneer for sale, at auction, who sold the same to the plaintiff for the sum of $500; and he paid the auctioneer that sum and received from him the note with the indorsements of the defendants thereon, and the protest of the note attached. Upon the trial, a verdict was taken for the plaintiff for the amount of the note and interest, subject to the opinion of the Superior Court at General Term, which court gave judgment for the defendants, upon the ground that there had *Page 442 been no demand of payment of the note of the maker, and notice thereof to the indorsers, after the transfer and delivery of the note to the plaintiff. The Superior Court treated the case as if there had been a new contract by the defendants of indorsement, at the time of the transfer and delivery of the note to the plaintiff. It is well settled that when a note, once due, is indorsed and transferred, the indorser cannot be made liable upon his contract of indorsement, unless there has been, subsequent to such indorsement and transfer, a demand of payment of the maker, and notice to the indorser. (Leavitt v. Putnam, 3 Comst., 494.) In this case there was no new contract of indorsement on the transfer and delivery of this note to the present plaintiff. The indorsers themselves put this note upon the market, after they had been legally and duly charged thereon, and made liable as indorsers thereon, with the evidence of such liability atttached. Such act of theirs was a representation of their liability on the note, and they are now estopped, in good faith and sound morals, from denying such liability. The plaintiff purchased the note, as thus presented, and they have received the amount of the purchase-money, and should not be permitted to deny their liability. But we are not without authority, in a case so nearly analogous, that it may be regarded as quite decisive. The rule, thus announced, has been regarded as the law of this State for more than forty years, and upon questions of this character should not be disturbed, except for grave and controlling considerations. In Williams v. Mathews (2 Cow., 252), the defendant was sued by the indorsee, as the indorser of a promissory note, made payable to his order and indorsed by him, dated April 9, 1815, payable on the 1st day of November then next. It appeared that a previous suit had been commenced on the note, which was discontinued, and in September, 1817, the note became the property of the plaintiff, who had no interest in it before that time, and that it was then sold to him. No notice of demand and refusal were given to the indorser, after the transfer and delivery thereof to the plaintiff. The plaintiff was nonsuited, and brought his writ of error, and *Page 443 the prominent point relied on by the defendant was that the note could not be negotiated after the indorser was charged. To this it was replied, that there was no legal objection to it, if it in fact remained unpaid at the time of the transfer. That the only objection to the transfer of a note after it becomes due, is, that it subjects the holder to all the equities in favor of the preceding parties. On the part of the defendant, it was contended that the transfer of dishonored paper creates a new contract, and that the law, in all cases to charge the indorser, required the holder, or his agent, to make a demand after the transfer. That a demand by a previous holder could not inure to the benefit of a subsequent holder, and it was conceded that, in that case, the necessity and the right of a demand by the plaintiff had ceased. Judge WOODWORTH, in the opinion of the court, says, that after the note became due it came back into the hands of one Williams, which did not imply a payment and taking up of the note, and he afterwards sold it to the plaintiff. That there was no legal objection to the validity of the transfer of a note after due, provided it remain unpaid, by any of the parties, whether the transfer is made by indorsement or mere delivery. The judgment was reversed. In the present case, the plaintiff dealt with Nicolay, the auctioneer, the presumptive holder of the note, and the plaintiff had no actual notice, or any notice to put him on inquiry as to who was the holder or seller of the note. He had a right to assume that all the parties to the note were bound for its payment, and in this faith he made the purchase of it. I do not see upon what principle the defendants should be absolved from liability, and am, therefore, of opinion that the judgment should be reversed, and that the plaintiff should have judgment upon the verdict. We place our judgment in this case upon the ground that the defendants are estopped by their acts from controverting their liability upon the note, as indorsers thereof. The other point discussed is not passed upon or disposed of, we regarding the other as controlling and conclusive. *Page 444